Robo-advice opens door to new client base

Advisers who incorporate robo-advice tools into their practice will be able to grow their client base by serving a new cohort like millennials, according to clover.com.au.

Harry Chemay, chief executive of robo-advice platform clover.com.au, says by incorporating a robo-advice tool into their practice, advisers can service more clients without it being "cost prohibitive".

"There's no real way that younger Australians and people with less money can get high-quality advice, particularly from independently-minded advisers, because [the advisers] can't provide a solution at a cost that is bearable," Mr Chemay told ifa's sister publication, Adviser Innovation.

Mr Chemay pointed out that robo-advice removes the cost associated with the human element of providing advice. Advisers who offer an automated tool can grow their client base at a fraction of the cost.

"Younger Australians feel that they have something available to them, and by the same token, advisers feel that there is a way to build a nursery for younger clients who will become full advice clients at some point in time," he said.

Mr Chemay believes robo-advice and human advice can "blend together" to form a "hybrid" advice model, and more robo-advice platforms will be operating in the Australian marketplace in the next six to 12 months.

"This time next year, there will be a number of start-ups, like us, out there in the marketplace but there will very likely also be a few offerings from the large institutions like the big banks."

Mr Chemay said the take-up of robo-advice by institutions will place additional pressure on advisers to adopt some kind of automated advice tool.

"The question will be: do [advisers] build [their] own or do [they] outsource it and look for some sort of white label solution?"